With businesses thriving and the US economy nearing full employment, the battle for talent has become critical. Thinking outside the box when it comes to executive compensation, can help business owners get a leg up on their competition.
In the past, business owners attracted, motivated and retained their more talented executives by offering a combination of salary, incentive bonus, and qualified plans. These traditional strategies fail to address several important issues:
- Cost of replacing key executives is getting higher
- ERISA makes it challenging to exclusively reward executives using qualified plans
- Salary increases and bonuses:
- Have short-term impact on business loyalty and overall satisfaction
- Force executives to pay taxes on income now
Over the coming months, we will explore several strategies for business owners to Recruit, Reward and Retain talent in this competitive job market utilizing “nonqualified” plans. Check out our “Education” section for this month’s idea.
Craig Welch, CFP®, CLU
President & CEO
Tools & Resources
Do you understand how your client’s policies can break?
Have your clients complete the Policy Assessment to ensure they are informed about their coverage.
4 Options for Addressing In-Force Policy Issues
- Recalibrate: Many policies can be fixed by simply making adjustments to the current contract (increase premium, decrease face amount, etc.).
- Replace: If a recalibration is not advantageous, a replacement can be used to obtain new coverage that aligns with client goals.
- Surrender: When coverage is no longer needed, a policy may be surrendered for the cash value.
- Settlement: In a situation where coverage is no longer needed, an in-force policy can be sold in the secondary market which may provide proceeds in excess of the policy cash value.